The Latest in Self-Storage
Self-storage properties have seen continued strength in occupancy rates, rental rates, and revenue growth. With around 10.6 percent of U.S. households renting a self-storage unit, according to Storable, the industry is projected to be valued at $64.71 billion by 2026. So far, in 2022, over $2.8 billion of self-storage facilities have traded. With the sector off to a great start in 2022, four of the five big self-storage REITs have boosted their same-store revenue outlooks for the rest of the year.
You can read more on self-storage’s performance here.
Though self-storage units are typically rented to those who are moving or need the extra storage for furniture, businesses have also used units to store goods. Self-storage customers vary across business types, storing perishable goods like pharmaceuticals or wines. The rise of e-commerce has recently played a role in business using these facilities, with smaller retailers using self-storage facilities as mini-warehouses for deliveries prior to their final destinations.
Though rent growth is slowing in some parts of the nation, high-growth metros across the Sunbelt region see elevated rents. According to Yardi Matrix, two of the top 31 metros reported increases of over ten percent for non-climate-controlled units, while ten of the top 31 metros saw increased rents of five percent or more in climate-controlled units. The average rental rate for non-climate controlled units in the U.S. is $131 per month.
New developments continue despite past concerns of oversaturation within the self-storage sector and the increasing costs for building materials. According to Yardi Matrix, properties under construction or in the planning stage account for 9.7 percent of current inventory, a 20-point basis increase compared to April 2022. Dallas-Fort Worth (DFW) expects to increase its self-storage inventory by 10.7 percent once all projects are complete. The market boasts over 71.9 million square feet in supply due to Texas’s rapid population growth.
You can read more on development trends in self-storage here.